Dividing the Spoils : Pensions, Privatization, and Reform in Russia's Transition

The authors present a political economy model in which policy is the outcome of an interaction between three actors: government (G), managers and workers (W), and transfer recipients (P). The government's objective is to stay in power, for whi...

Full description

Bibliographic Details
Main Authors: Kapstein, Ethan B., Milanovic, Branko
Format: Working Paper
Language:English
en_US
Published: World Bank, Washington, DC 2015
Subjects:
Online Access:http://documents.worldbank.org/curated/en/2000/03/438329/dividing-spoils-pensions-privatization-reform-russias-transition
http://hdl.handle.net/10986/22313
id okr-10986-22313
recordtype oai_dc
repository_type Digital Repository
institution_category Foreign Institution
institution Digital Repositories
building World Bank Open Knowledge Repository
collection World Bank
language English
en_US
topic AGENCY PROBLEMS
ASSET STRIPPING
AUTHORITY
BANKING SYSTEMS
BOOK VALUE
BUDGETARY ALLOCATIONS
CAMPAIGN CONTRIBUTIONS
CAPITAL GAIN
CAPITAL MARKETS
CITIZENS
COMMUNISM
COMMUNIST
COMMUNIST PARTY
CORPORATE GOVERNANCE
CORRUPTION
DECENTRALIZATION
DEMOCRACY
DEVELOPMENT
DISTRICTS
ECONOMIC REFORM
ECONOMIES IN TRANSITION
ELECTED OFFICIALS
ELECTORAL SYSTEM
EMPLOYMENT
ENTERPRISE REFORM
ENTERPRISE RESTRUCTURING
FISCAL
FISCAL POLICY
FISCAL STANCE
FOREIGN INVESTORS
FOREIGN LOANS
GDP
GINI COEFFICIENT
GOVERNMENT SUBSIDIES
HEADACHES
HUMAN RESOURCES
HUMAN RESOURCES
IMPOTENCE
INCOME
INDEXATION
INDIVIDUAL ACCOUNTS
INFLATION
INFORMAL SECTOR
INTEREST RATES
LOBBYING
MACROECONOMIC POLICIES
MACROECONOMIC PROBLEMS
MACROECONOMIC STABILIZATION
MANAGERS
MARKET VALUE
PAYMENT ARREARS
PAYROLL TAXES
PENSIONS
POLITICAL CONTROL
POLITICAL ECONOMY
POLITICAL ECONOMY OF REFORM
POLITICAL ELITE
POLITICIANS
PRESIDENCY
PRIVATE SECTOR
PRIVATIZATION
PRIVATIZATION AGENCY
PROFESSIONS
PROFIT SEEKING
PUBLIC EXPENDITURE
PUBLIC OPINION
PUBLIC SECTOR
PUBLIC SPENDING
REGRESSION ANALYSIS
RENT SEEKING
RETIREMENT
SAVINGS
SCHOOLS
SMALL BUSINESS
SOCIAL POLICY
SOCIAL PROTECTION
SOCIAL SAFETY
SOCIAL SAFETY NET
SOCIAL SECURITY
SOCIAL TRANSFERS
SOCIAL WELFARE
STATE ASSETS
STATE ENTERPRISES
STATE PROPERTY
STATE REVENUES
STATE SECTOR
STATE SUBSIDIES
STATE-OWNED ENTERPRISES
TAX COLLECTION
TAX EXEMPTIONS
TAX PAYMENTS
TAX RATES
TAX REVENUES
TAXATION
TOTAL EXPENDITURES
TRANSITION ECONOMIES
VOTERS
VOTING
VOUCHER PRIVATIZATION
WAGES
WEALTH
WORKERS
WORLD POLITICS
spellingShingle AGENCY PROBLEMS
ASSET STRIPPING
AUTHORITY
BANKING SYSTEMS
BOOK VALUE
BUDGETARY ALLOCATIONS
CAMPAIGN CONTRIBUTIONS
CAPITAL GAIN
CAPITAL MARKETS
CITIZENS
COMMUNISM
COMMUNIST
COMMUNIST PARTY
CORPORATE GOVERNANCE
CORRUPTION
DECENTRALIZATION
DEMOCRACY
DEVELOPMENT
DISTRICTS
ECONOMIC REFORM
ECONOMIES IN TRANSITION
ELECTED OFFICIALS
ELECTORAL SYSTEM
EMPLOYMENT
ENTERPRISE REFORM
ENTERPRISE RESTRUCTURING
FISCAL
FISCAL POLICY
FISCAL STANCE
FOREIGN INVESTORS
FOREIGN LOANS
GDP
GINI COEFFICIENT
GOVERNMENT SUBSIDIES
HEADACHES
HUMAN RESOURCES
HUMAN RESOURCES
IMPOTENCE
INCOME
INDEXATION
INDIVIDUAL ACCOUNTS
INFLATION
INFORMAL SECTOR
INTEREST RATES
LOBBYING
MACROECONOMIC POLICIES
MACROECONOMIC PROBLEMS
MACROECONOMIC STABILIZATION
MANAGERS
MARKET VALUE
PAYMENT ARREARS
PAYROLL TAXES
PENSIONS
POLITICAL CONTROL
POLITICAL ECONOMY
POLITICAL ECONOMY OF REFORM
POLITICAL ELITE
POLITICIANS
PRESIDENCY
PRIVATE SECTOR
PRIVATIZATION
PRIVATIZATION AGENCY
PROFESSIONS
PROFIT SEEKING
PUBLIC EXPENDITURE
PUBLIC OPINION
PUBLIC SECTOR
PUBLIC SPENDING
REGRESSION ANALYSIS
RENT SEEKING
RETIREMENT
SAVINGS
SCHOOLS
SMALL BUSINESS
SOCIAL POLICY
SOCIAL PROTECTION
SOCIAL SAFETY
SOCIAL SAFETY NET
SOCIAL SECURITY
SOCIAL TRANSFERS
SOCIAL WELFARE
STATE ASSETS
STATE ENTERPRISES
STATE PROPERTY
STATE REVENUES
STATE SECTOR
STATE SUBSIDIES
STATE-OWNED ENTERPRISES
TAX COLLECTION
TAX EXEMPTIONS
TAX PAYMENTS
TAX RATES
TAX REVENUES
TAXATION
TOTAL EXPENDITURES
TRANSITION ECONOMIES
VOTERS
VOTING
VOUCHER PRIVATIZATION
WAGES
WEALTH
WORKERS
WORLD POLITICS
Kapstein, Ethan B.
Milanovic, Branko
Dividing the Spoils : Pensions, Privatization, and Reform in Russia's Transition
geographic_facet Europe and Central Asia
Commonwealth of Independent States
Eastern Europe
Poland
Russian Federation
relation Policy Research Working Paper;No. 2292
description The authors present a political economy model in which policy is the outcome of an interaction between three actors: government (G), managers and workers (W), and transfer recipients (P). The government's objective is to stay in power, for which it needs the support of either P or W. It can choose slow privatization with little asset stripping and significant taxation, thus protecting the fiscal base out of which it pays pensioners relatively well (as in Poland). Or it can give away assets and tax exemptions to managers and workers, who then bankroll it and deliver the vote, but it thereby loses taxes and pays little to pensioners (as in Russia). The authors apply this model to Russia for the period 1992-96. An empirical analysis of electoral behavior in the 1996 presidential election shows that the likelihood of someone voting for Yeltsin did not depend on that person's socioeconomic group per se. Those who tended to vote for Yeltsin were richer, younger, and better educated and had more favorable expectations for the future. Entrepreneurs, who had more of these characteristics, tended to vote for Yeltsin as a result, while pensioners, who had almost none, tended to vote against Yeltsin. Unlike Poland, Russia failed to create pluralist politics in the early years of the transition, so no effective counterbalance emerged to offset managerial rent-seeking and the state was easily captured by well-organized industrial interests. The political elite were reelected because industrial interests bankrolled their campaign in return for promises that government largesse would continue to flow. Russia shows vividly how political economy affects policymaking, because of how openly and flagrantly government granted favors in return for electoral support. Bur special interests, venal bureaucrats, and the exchange of favors tend to be the rule, not the exemption, elsewhere as well.
format Working Paper
author Kapstein, Ethan B.
Milanovic, Branko
author_facet Kapstein, Ethan B.
Milanovic, Branko
author_sort Kapstein, Ethan B.
title Dividing the Spoils : Pensions, Privatization, and Reform in Russia's Transition
title_short Dividing the Spoils : Pensions, Privatization, and Reform in Russia's Transition
title_full Dividing the Spoils : Pensions, Privatization, and Reform in Russia's Transition
title_fullStr Dividing the Spoils : Pensions, Privatization, and Reform in Russia's Transition
title_full_unstemmed Dividing the Spoils : Pensions, Privatization, and Reform in Russia's Transition
title_sort dividing the spoils : pensions, privatization, and reform in russia's transition
publisher World Bank, Washington, DC
publishDate 2015
url http://documents.worldbank.org/curated/en/2000/03/438329/dividing-spoils-pensions-privatization-reform-russias-transition
http://hdl.handle.net/10986/22313
_version_ 1764450606581284864
spelling okr-10986-223132021-04-23T14:04:07Z Dividing the Spoils : Pensions, Privatization, and Reform in Russia's Transition Kapstein, Ethan B. Milanovic, Branko AGENCY PROBLEMS ASSET STRIPPING AUTHORITY BANKING SYSTEMS BOOK VALUE BUDGETARY ALLOCATIONS CAMPAIGN CONTRIBUTIONS CAPITAL GAIN CAPITAL MARKETS CITIZENS COMMUNISM COMMUNIST COMMUNIST PARTY CORPORATE GOVERNANCE CORRUPTION DECENTRALIZATION DEMOCRACY DEVELOPMENT DISTRICTS ECONOMIC REFORM ECONOMIES IN TRANSITION ELECTED OFFICIALS ELECTORAL SYSTEM EMPLOYMENT ENTERPRISE REFORM ENTERPRISE RESTRUCTURING FISCAL FISCAL POLICY FISCAL STANCE FOREIGN INVESTORS FOREIGN LOANS GDP GINI COEFFICIENT GOVERNMENT SUBSIDIES HEADACHES HUMAN RESOURCES HUMAN RESOURCES IMPOTENCE INCOME INDEXATION INDIVIDUAL ACCOUNTS INFLATION INFORMAL SECTOR INTEREST RATES LOBBYING MACROECONOMIC POLICIES MACROECONOMIC PROBLEMS MACROECONOMIC STABILIZATION MANAGERS MARKET VALUE PAYMENT ARREARS PAYROLL TAXES PENSIONS POLITICAL CONTROL POLITICAL ECONOMY POLITICAL ECONOMY OF REFORM POLITICAL ELITE POLITICIANS PRESIDENCY PRIVATE SECTOR PRIVATIZATION PRIVATIZATION AGENCY PROFESSIONS PROFIT SEEKING PUBLIC EXPENDITURE PUBLIC OPINION PUBLIC SECTOR PUBLIC SPENDING REGRESSION ANALYSIS RENT SEEKING RETIREMENT SAVINGS SCHOOLS SMALL BUSINESS SOCIAL POLICY SOCIAL PROTECTION SOCIAL SAFETY SOCIAL SAFETY NET SOCIAL SECURITY SOCIAL TRANSFERS SOCIAL WELFARE STATE ASSETS STATE ENTERPRISES STATE PROPERTY STATE REVENUES STATE SECTOR STATE SUBSIDIES STATE-OWNED ENTERPRISES TAX COLLECTION TAX EXEMPTIONS TAX PAYMENTS TAX RATES TAX REVENUES TAXATION TOTAL EXPENDITURES TRANSITION ECONOMIES VOTERS VOTING VOUCHER PRIVATIZATION WAGES WEALTH WORKERS WORLD POLITICS The authors present a political economy model in which policy is the outcome of an interaction between three actors: government (G), managers and workers (W), and transfer recipients (P). The government's objective is to stay in power, for which it needs the support of either P or W. It can choose slow privatization with little asset stripping and significant taxation, thus protecting the fiscal base out of which it pays pensioners relatively well (as in Poland). Or it can give away assets and tax exemptions to managers and workers, who then bankroll it and deliver the vote, but it thereby loses taxes and pays little to pensioners (as in Russia). The authors apply this model to Russia for the period 1992-96. An empirical analysis of electoral behavior in the 1996 presidential election shows that the likelihood of someone voting for Yeltsin did not depend on that person's socioeconomic group per se. Those who tended to vote for Yeltsin were richer, younger, and better educated and had more favorable expectations for the future. Entrepreneurs, who had more of these characteristics, tended to vote for Yeltsin as a result, while pensioners, who had almost none, tended to vote against Yeltsin. Unlike Poland, Russia failed to create pluralist politics in the early years of the transition, so no effective counterbalance emerged to offset managerial rent-seeking and the state was easily captured by well-organized industrial interests. The political elite were reelected because industrial interests bankrolled their campaign in return for promises that government largesse would continue to flow. Russia shows vividly how political economy affects policymaking, because of how openly and flagrantly government granted favors in return for electoral support. Bur special interests, venal bureaucrats, and the exchange of favors tend to be the rule, not the exemption, elsewhere as well. 2015-07-28T18:27:01Z 2015-07-28T18:27:01Z 2000-03 Working Paper http://documents.worldbank.org/curated/en/2000/03/438329/dividing-spoils-pensions-privatization-reform-russias-transition http://hdl.handle.net/10986/22313 English en_US Policy Research Working Paper;No. 2292 CC BY 3.0 IGO http://creativecommons.org/licenses/by/3.0/igo/ World Bank World Bank, Washington, DC Publications & Research Publications & Research :: Policy Research Working Paper Europe and Central Asia Commonwealth of Independent States Eastern Europe Poland Russian Federation